Obama Budget Pushes States Into War With Their Unions
Hudson: Many state and local governments near bankruptcy need federal revenue share
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.
PRES. BARACK OBAMA: Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. So tonight I am proposing that starting this year, we freeze annual domestic spending for the next five years. Now, this would reduce the deficit by more than $400 billion over the next decade. This freeze will require painful cuts. I propose cuts to things I care deeply about, like community action programs. The secretary of defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.
JAY: Now joining us from Forest Hills, New York, is Michael Hudson. Michael is a former Wall Street economist, a distinguished research professor at the University of Missouri-Kansas City. And you can read more of Michael at Michael-Hudson.com. Thanks for joining us, Michael.
MICHAEL HUDSON, RESEARCH PROFESSOR, UKMC: Thank you.
JAY: Families are sacrificing. It’s time for more painful cuts.
HUDSON: Well, it’s really the whole economy that’s being sacrificed. There are two things that Mr. Obama avoided. One is the state and local budget deficit. California, Chicago, Illinois, Florida, Nevada, they’re broke, and the only way of keeping them solvent, the only way to save them from having to sell off their roads and public utilities and anything in the public domain, is the revenue sharing from the federal government. There’s not going to be any money to do this. So Mr. Obama has said to the states and cities, drop dead. The second thing he didn’t mention [inaudible] obviously very unpleasant for him to focus on, is the foreclosure deficit. They expect real estate prices to fall by another 20 percent this year. One-third of American homes are now in negative equity, and that’s given the fact that another third don’t have any mortgage all, so it’s half of the American homes with mortgages are already in negative equity. So the foreclosures are going to continue. So Mr. Obama’s message was, banks, foreclose on the loans, take the property of the low-income people, and let’s increase the sucking up of the wealth to the top of the economic pyramid. Those were the two messages.
JAY: I guess that then pushes states into wars with their unions, which some people are suggesting might lead to the weakening or breaking up of some of the public sector unions, one of the last places there’s still some strength in the union.
HUDSON: Well, that’s the objective. That’s what Margaret Thatcher said she was doing, explicitly, in England. And Mr. Obama’s policy is basically that of Margaret Thatcher. But it take–in England it took the Labour Party under Tony Blair to complete the Thatcherite program, because the Conservatives never could have got away with what Blair got away with–privatizing the railroads and just finishing the so-called public-private partnership. In America, the Republicans couldn’t get away with an anti-labor policy, especially an anti-labor policy that works most cruelly against the blacks, Hispanics, and the ethnic minorities. Only the Democrats can do this. That’s their job.
JAY: But the problem, Michael, is that you seem to be, for some reason I don’t understand, focusing on the present. But this speech was about a fight for the future. It wasn’t about the present.
HUDSON: What did George Orwell say? He who controls the present controls the past, and whoever controls the past controls the future. I guess we’re into that kind of a situation. Obviously, the task is to put the class war back in business, as far as the future’s concerned.
JAY: There was a strategic decision in the speech made: don’t talk about the real current circumstances people are in; point to the future. Now, some people have said–talked about that in a positive way. It introduces some sense of optimism that even if the crisis right now is quite severe, there’s a vision for reshaping the American economy that, if one believes the words, may avoid some of this in the future. What do you make of that vision for the future, which to some extent’s focused on clean energy?
HUDSON: Oh, very optimistic. When he said we’ve sent a message to all parts of the globe, we will not relent, we will not waver, we will defeat you, that’s very optimistic. If you’re a militarist, if you’re a right-winger, and if you believe that America can continue to rely on oligarchies and dictatorships throughout the world, then you’re very optimistic.
JAY: Well, to be fair, most of what he said about the rest of the world was we will outcompete you. So that’s not quite the same as we will militarize you, although that seems more or less already in place.
HUDSON: When he said he’s going to reduce the domestic budget but not the military budget, that’s what he means. And let’s say–what does it mean to say, we will compete with you? What it means is we will lower the price of our labor to be competitive with you. We will lower our price so that American workers can compete with workers in India, in Indonesia, in China. We will grind down our living standards. We will put the class war back in business so we can compete by impoverishing our population. That’s what we promised to our financial backers.
JAY: Now, some of the people that have supported this speech point to the fact that he said he’ll fight to defend Social Security. What’d you make of that section?
HUDSON: He will defend Social Security on a stripped-down, reduced basis. All you have to do is look at who he appointed to the Social Security commission. It was to do to Social Security this year what the Greenspan Commission in 1982 did. It’s to recommend cutbacks in Social Security, raise the retirement age, have all sorts of cutbacks. The basic principle that is the key to Obama’s policy is labor must pay, not my financial backers on Wall Street.
JAY: He said he disagrees. You were talking about the deficit commission, and he says he disagrees with elements of that. And in the speech he seemed to be staking out territory that he would defend Social Security, not go along with this push to reform it.
HUDSON: When says he opposes them, then you absolutely know he’s going to support them and go even further. Let me give you an example. He shed crocodile tears over the tax cuts for the rich. The largest element [inaudible] applause in his speech, when he said, and Congress must not give any more tax breaks to the very rich, and they’d just done it for the next two years until the next presidential election–here he was cheerleading for the tax cuts for the rich, cheerleading to abolish the estate tax, continue it for another two years, to give all of the tax breaks in, and then he’s saying we must not do this again, but he just did. Now, how hypocritical can you be? I mean, that was the laugh line of the whole speech.
JAY: Well, again, the press at least is saying, pundits are saying what he’s doing is positioning the fight for 2012, that he’s going to go into 2012 fighting to end the tax breaks for the rich.
HUDSON: Who can believe him again? He’s the American Tony Blair. He’s already double-crossed almost all of his backers originally. He’s gone back on all his campaign promises. You can’t believe a word he says. That was a slogan that the Conservatives in England used against Tony Blair, and it’s the slogan the Republicans are going to use here.
JAY: Thanks very much for joining us, Michael.
HUDSON: Okay. Quite welcome.
JAY: And thank you for joining us on The Real News Network. And if you want to read more of Michael’s work, it’s at Michael-Hudson.com.
End of Transcript
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